Should You Invest in a Sports Franchise?

Consider this investing proposition: You have a chance to invest in businesses that have been around since the 1920s and are growing in popularity. These companies have an intensely loyal consumer base; in some areas of the country, there is a waiting list of years to purchase products. Most rational investors would argue this is a compelling value proposition.

The industry that I am referring to is professional sports, particularly its franchises and ancillary businesses. This seems like a slam dunk of an investment theme; however, to quote ESPN football analyst Lee Corso: “Not so fast, my friend!” It is true that professional sports leagues, with its derivative businesses such as athletic apparel and media conglomerates, have become a multi-billion dollar industries, but these businesses are not risk-free and in many ways can be more risky than traditional corporations.